Million Decade Ltd v. Tung Fai
Read the full judgment text of HCA 1062/2013 on BabelCite. This High Court CFI judgment was delivered on 15 September 2015.
1. Million Decade Ltd (“Million Decade”) is the plaintiff and Tung Fai is the defendant in HCA 1062/2013. Tung Fai is the plaintiff and Wei Dong is the defendant in HCA 1660/2013. Wei Dong is the shareholder and director of Million Decade. These two actions have been ordered to be tried together with HCA 1063/2013.
Cited by 2 cases · Cites 7 cases
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HCA 1062/2013 IN THE HIGH COURT OF THE HONG KONG SPECIAL ADMINISTRATIVE REGION COURT OF FIRST INSTANCE HIGH COURT ACTION NO 1062 OF 2013 _________________________
AND HCA 1660/2013 IN THE HIGH COURT OF THE HONG KONG SPECIAL ADMINISTRATIVE REGION COURT OF FIRST INSTANCE HIGH COURT ACTION NO 1660 OF 2013 _________________________
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_____________ D E C I S I O N _____________ THE APPLICATIONS 1.Million Decade Ltd (“Million Decade”) is the plaintiff and Tung Fai is the defendant in HCA 1062/2013. Tung Fai is the plaintiff and Wei Dong is the defendant in HCA 1660/2013. Wei Dong is the shareholder and director of Million Decade. These two actions have been ordered to be tried together with HCA 1063/2013. 2.There are four applications by Million Decade and Wei Dong by way of:
3.The first three applications are contested and the parties are legally represented.[1] THE FACTUAL BACKGROUND 4.Mr. J. Hui, counsel for Tung Fai has set out the brief factual background in his written submissions, which I shall adopt as follows:
THE ISSUE IN DISPUTE 5.Million Decade and Wei Dong strongly deny the existence of the Oral Agreement mentioned above. However, they agree that Tung Fai had advised and assisted on the listing of Fu Ji[2]; Tung Fai had remained in the management of Fu Ji after its listing and provided services such as asset reorganization, merger and acquisition, demerger and financing to Fu Ji[3] and that they had paid Tung Fai the amount of $38,688,676.70 during the period between 2005 to 2008[4] as ex gratia payment, for which they have made no claim against Tung Fai in the actions herein. The claims in HCA 1062 and 1063 of 2013 are for the amounts of $25,400,000 and $9,600,000 respectively alleged paid by Million Decade and Top Ample, an affiliate of Wei Dong as loans to Tung Fai.[5] 6.Having perusing the pleadings, it is quite apparent that the main disputes will be over whether there had been an Oral Agreement as alleged by Tung Fai for his defence of the claims in HCA 1062 and HCA 1063 of 2013 and his claim in HCA 1660 of 2013, which will be the fact to be found by the trial judge at the end of the trial. For such fact finding exercise, details of the facts will be hotly contested. 7.The actions have been ordered to be tried together before the same judge as they involve common issues of fact. However, it should be noted that Tung Fai had not raised his claim in HCA 1660/2013 as counterclaim in the two actions against him by Million Decade and Top Ample although he admitted having received the sums of $25,400,000 and $9,600,000 from Million Decade and Top Ample in his Amended Defence at paragraph 18, though in the same pleading Tung Fai had also pleaded that Wei Dong made the payments through the companies. He has taken out HCA 1660/2013 to claim against Wei Dong personally. 8.Million Decade says that the Oral Agreement was an afterthought contrived by Tung Fai for opposing the claims in HCA 1062 and HCA 1063 of 2013 respectively[6] THE RELEVANT LEGAL PRINCIPLES 9.The discussion below will mainly focus on the supplemental and further witness statements, it will be convenient to set out the relevant legal principles for this issue:
DISCUSSION The legal argument 10.Tung Fai refers to the Decision of Allington Investments Corporation and others v First Pacific Bancshares Holdings Limited and others [1995] 2 HKC 567 to say that usually no more than one supplemental statement from a witness is necessary. Million Decade has rightly submitted that this decision should be read together with O.38, r.2A(7A), which was enacted in 2008 where the court will not allow a party to adduce evidence at trial outside the witness statements without good reason. This is not to say that a party should be allowed to serve rounds of witness statements, making the evidence in a piecemeal manner. Nor will it affect the general principles that there should not be repetition of the evidence or giving evidence which is not admissible, such as opinion by a witness on facts only; see Hong Kong Civil Procedure 2015, Vol 1, §38/2A/6; or giving evidence in anticipation of arguments at trial, which is not relevant to the issue in dispute, see Zebra Industries (Orogenesis Nova) Ltd. v Wah Tong PaperProducts Group Ltd.(unreported, HCMP 436/2013, G Lam J 12 February 2015, at §§12-14) The practice for supplemental witness statements 11.Tung Fai complains that Million Decade has not filed any affidavit to explain the reasons for justifying the grant of the court’s indulgence. Obviously, this is absent for this application, contrary to the decision in Chan Wing Cheung, Allan. In making applications such as this, the court will expect the applicant to set out at least the following reasons in support of the application:
12.Those reasons above will ensure that the applicant has properly considered the grounds in support of the application, assist the other party to decide whether such application should be resisted; and above all, to assist the court to identify the issues in the application, saving time for the preparation and the hearing. Application of the legal principles to the facts 13.Tung Fai complains that the proposed witness statements are highly repetitive, and none of them covers any new topics or pertain to new issues pertinent to the trial.[7] Mr. Hui goes further today that the proposed supplemental witness statements are irrelevant or with no or very low probative value or are arguments which are not admissible as evidence in chief. 14.As decided in Tang Chung Wah, the court should take on board the nature of the disputes between the parties in exercising its discretion as to whether the supplemental witness statements should be allowed. 15.From the factual background in paragraphs 4 and 5 above, it is clear that the main issue of dispute is whether there had been an Oral Agreement in place of the Cooperation Agreement. This issue is known to the parties at the pleading stage and they had prepared their respective witness statements, in which they set out the factual background in support of their cases. It is obvious that Tung Fai had pleaded the Oral Agreement in his Defence in HCA 1062 and HCA 1063 of 2013 and also in his Statement of Claim in HCA 1660 of 2013. The burden is on him to prove it. 16.Wei Dong, on the other hand, alleged that the Oral Agreement was an afterthought contrived by Tung Fai for opposing the claims in HCA 1062 and HCA 1063 of 2013 respectively[8]. 17.Wei Dong admits that the 3rd Witness Statements of his and Yao Juan’s are substantially the same, except that his 3rd Witness Statement is slightly more detailed in §12 and §23(3) and has additional paragraphs at §§19-21, 24(2), 25A, 26A. The two statements also deal with different clerical errors appearing in their previous statements[9] and they deal with the allegations raised in the 2nd Witness Statement of Tung Fai. I shall consider the purposes of the additional paragraphs in the proposed 3rd witness statement of Wei Dong, the same also applies to Yao Juan’s proposed 3rd witness statement. 18.First, whether Wei Dong is contactable should not be the main issue of dispute. It only deals with Wei Dong’s allegation that the Oral Agreement was an afterthought contrived by Tung Fai. The details of the addresses as set out in the 3rd witness statement will not be conclusive on this issue. Yet, there is no other evidence to contradict those details. The better course is to test the evidence by way of cross-examination at trial. The fact that Tung Fai said that Wei Dong was not contactable does not alter the fact that if he were to take out legal proceedings, he could have applied for substituted service of the legal proceedings on Wei Dong. 19.Second, whether Yao Juan had met with Tung Fai to discuss the debts and the Xiamen hotel project was mentioned in the previous witness statements. This issue does not deal with whether there had been an Oral Agreement in place of the Cooperation Agreement although it may touch on the credibility of the evidence. 20.Third, the extent of Tung Fai’s contributions to Fu Ji and the circumstances in which the alleged Oral Agreement was made by additional materials that (a) Wei Dong would not be willing to be bound personally and it is normal for management personnel of listed companies to be rewarded on an ex gratia or discretionary basis; (b) after Tung Fai introduced investors from CLSA, Wei Dong had conducted the main negotiations with CLSA and (c) Tung Fai did not work full time in Fu Ji and occupied an advisory role. In my view, (a) is Wei Dong’s opinion, not admissible in evidence; (b) & (c) are irrelevant to whether there was an Oral Agreement. Wei Dong had already admitted that Tung Fai had rendered assistance to the listing of the Fu Ji and that he was awarded by way of ex gratia payments. 21.Fourth, the circumstances regarding the Xiamen hotel project are, in my view, irrelevant to whether there had been an Oral Agreement as Wei Dong says that it shows the relationship between Wei Dong and Tung Fai couples only[10]. Wei Dong and Tung Fai had agreed in their respective witness statements that this issue is not relevant to the actions. Senior counsel submits that this issue is relevant because there is a dispute over whether $80 million were paid for the project. However, this issue is only relevant after the finding of the fact that the Oral Agreement existed, not its formation. It may affect the credibility of the evidence of the witnesses at trial at best. 22.Fifth, the circumstances of Fu Ji’s liquidation are even more remote to the issue of whether there was an Oral Agreement. 23.Wei Dong’s Senior Counsel take the view that “it matters not that the new evidence does not directly support the existence or non-existence of the Alleged Oral Agreement, as long as it throws doubt on the other side’s case, as submitted above. Supplemental witness statements have routinely been allowed where a party seeks to take issue with the evidence of his opponent and “might arguably make one party’s case more credible or probable as compared to the other party’s case”: Excel Courage Holdings Limited and others v Wong Sin Lai and others, HCCL 34/2013 (unrep, 15 December 2014) per G Lam J at §§20-21.” 24.The facts of Excel Courage are complicated. Suffice it to say, the supplemental witness statement of the 1st defendant goes to the main issues of dispute whereas those issues above are no more than tangential to the main issue of the existence of the Oral Agreement. Judge G. Lam, the same judge in Liu Wai Keung did not support the supplemental witness statement of evidence of such tangential value. 25.I accept that leave has not been given to the plaintiffs to set down for trial and that TungFai has not been able to show prejudice if the proposed third witness statements are allowed to be served. However, since there have already been substantive evidence covering the main issues as raised by Wei Dong above, the third witness statements will not add much substance to the other witness statements. The refusal of leave to admit the proposed 3rd witness statements will not prejudice Wei Dong’s case in the actions. But the inclusion of such materials offends the principles of admissibility of evidence and will add costs and time to the proceedings unnecessarily. I shall therefore exercise my discretion to disallow the proposed third witness statements of Wei Dong and Yao Juan. 26.In relation to the witness statement of Wai Yao, I consider that it should be allowed to be served as this is the corroborative evidence of the relationship between the two families, which Wei Dong has been adopting in support of his case in his witness statements already. There will not be prejudice to Tung Fai if Wai Yao’s witness statement is admitted in evidence. THE SUMMONS FOR AMENDMENT OF DEFENCE 27.The objections to the proposed amendments to the Defence in HCA 1660/2013 are that they are unnecessary because they are contrary to the evidence[11], are semantic trivialities and forensic legal arguments [12]. 28.It is quite clear that the proposed Amended Defence pleaded alternative defence that if the alleged Oral Agreement existed. It is simply unfair to debar the defendant from pleading an alternative defence in the pleadings, particularly when the matter has not even been given leave to set down for trial. 29.The law on amendment is quite clear. Leave should be given to the defendant to make the proposed amendments. The defendant’s application is allowed. COSTS AND ORDER 30.On the question of costs, having considered the submissions, the costs should be as follows:
31.This court shall now make an order in terms as follows:
Mr. Douglas Lam SC and Mr. Jason Yu, instructed by Henry Wai & Co. for the plaintiff of HCA 1062/2013 and the defendant of HCA 1660/2013 Mr. John Hui, instructed by Sit, Fung, Kwong & Shum, for the defendant of HCA 1062/2013 and the plaintiff of HCA 1660/2013 [1] See end of this Decision [2] §10(2) of the Amended Reply of HCA1062/2013 [3] §13(3) ibid [4] §15 ibid [5] See §§15(a) and (b) ibid [6] §18(3) ibid [7] §14 of written submissions; [8] §18(3) ibid [9] §54 of written submissions; [10] See §60(1) of written submissions; [11] §23(a) of written submissions [12] §23(b) ibid; |
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